Grant to face creditors over bankrupt organic farm

The owner of the 2,000-acre venture faces a bankruptcy hearing in Fort Collins.

Jan. 21, 2013

Andy Grant

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Dozens of frustrated and angry creditors of Grant Family Farms are expected to crowd into a Fort Collins meeting room today to air their claims against the now-bankrupt organic farm and its owner.

The meeting is a formal part of Chapter 7 federal bankruptcy proceedings in which the farm’s assets are to be liquidated to help settle claims.

The 2,000-acre farm in Wellington was the nation’s largest Community Supported Agriculture farm before it collapsed under the weight of about $10 million in debt and liabilities. The farm’s more-than 200 creditors and their attorneys will have the chance today to directly question and challenge farm owner Andy Grant about where their money went.

“People are angry,” said Martha Power, a longtime farm employee who quit last year. “I think people are frustrated and they want a voice, and this may be the only time they get one.”

Many of the farm’s creditors, employees and contractors knew it had been struggling financially for several years. The farm underwent bankruptcy restructuring twice, but creditors who believed in the farm’s organic evangelism repeatedly loaned it money. A Boulder-based agricultural lending group, Localization Partners, loaned the farm $1.5 million for a year at 16 percent interest.

Grant claims Localization Partners has mismanaged the farm’s financial affairs and has refused to pay bills and feed animals. Grant said a decade of struggles and crop losses took their toll on the farm that, at its height, employed about 300 full-time and seasonal workers.

“There are very real people, real people that have lost their jobs, that are struggling on threads,” Grant said in an email to the Coloradoan. “Not talking just about me, but many hardworking long-time people of the farm that we all call ‘our’ farm.”

Power and her husband loaned the farm more than $330,000 in 2008. They are among hundreds of creditors hoping to recoup their money after the federally appointed bankruptcy trustee sells off the farm’s remaining assets, listed at about $3.7 million.

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Power and her husband are suing the farm, Grant, and the two men who live with him for fraud. Power’s lawsuit claims Grant conspired with partners Nick DiGiorgio and Michael Bartolementi to strip assets from the farm for their personal benefit.

Among the farm’s biggest creditors are the state and federal governments, which are owed at least $1 million in back taxes, court records show.

Grant says the farm owes him nearly $300,000 in back wages, owes Bartolementi $558,000 in “business debt,” and owes DiGiorgio $490,000 in “trade debt,” and a further $34,000 in “trade debt” to DiGiorgio’s Six Dog Investments, LLC. All three men, and Six Dog, share the same Wellington address. The farm also owes Grant’s father — who founded it — $671,000 in “business debt.”

Grant and Bartolementi collected more than $178,000 in wages from the farm last year.

Loveland bankruptcy attorney Troy Krenning said federal and state governments usually get their money back first. In addition to the federal and state payroll taxes owed, the farm also owes Larimer County more than $38,000 in personal property taxes, court records show.

Krenning said the bankruptcy trustee has wide authority to ensure any property sold or transferred by the farm to others in the past two years was done legitimately. That can include checking the relationships between people or businesses that acquired farm assets, and ensuring that any property was sold for fair market value.

“The trustee has pretty broad power, and the creditors will be wise to that too,” said Krenning, who has no connection to the case. “This one will probably have some fireworks.”